The Higher Education Bill – currently passing through the hoops of parliamentary deliberation and approval – involves, for the first time, generating systematic data on graduates’ tax returns. The government sees this as leading one way, but I’m imagining (hoping) that something else might happen…
The data they’re going to collect means that we’ll be able to track clearly, for the first time, how graduates from different universities, having studied different subjects, fare financially over their working lives. The rationale behind this is an economic one – to establish, with greater precision, what ‘graduate premiums’ are – how much graduates earn based on what and where they study. This, the government hopes, will offer a stronger argument for universities to charge different rates for their degrees, something they’ve been trying to encourage for some time. The idea, you see, is that higher education is a market, and differences in quality should be reflected in differences in price. There are a lot of arguments as to why education isn’t/shouldn’t be a market, but I’ll save that conundrum for another day.
Plan A: The Price Range
The logic of matching tax returns and degrees works like this. Let’s say, for example, that a graduate from an elite university, over their working lifetime, earns an average of £60,000 a year, and one from a non-elite university £40,000. This provides a bona fide reason, they’ll argue, for elite universities to charge more because the degree is ‘worth more’. You can also drill down a little deeper and see that a degree in Finance leads to better earnings than a degree in Art History, so the Finance option should cost more. In short, highly-ranked universities should charge more (some of them are already pushing for this), and more lucrative degrees should be more expensive. The problem is, this doesn’t wash.
Firstly, there is no clear indication that an English degree from ‘Top University X’ is better than an English degree from ‘Mediocre University Y’. We have all sorts of comparisons and rankings that include differences in admission standards, student satisfaction, retention rates, research income and capacity, and so on. They’re also looking to measure teaching quality (which they can’t). As I’ve ranted regularly about rankings, these figures are based on proxies. In other words, they measure something ‘next to’ what they want to capture, and then pretend that they’ve actually captured it. The linking of tax records is essentially going to be doing the same thing, but from a different angle, as it will equate quality with with earnings.
Secondly, as I’ve written elsewhere, calculating the ‘price’ of a degree is problematic. UK universities currently all charge the same, at least for undergraduate (Bachelor) courses. There are several reasons for this:
- The government has capped what you can charge for an undergraduate degree, currently £9000;
- Universities are worried that charging a lower rate might make them look as if they’re lower quality (the same logic as luxury goods, interestingly);
- Not all subjects cost the same to deliver. Currently the excess cash from cost-effective degrees (in humanities and social sciences) is used to support cost-intensive courses (in sciences);
- Degrees in the same subject but at different universities, cost about the same to deliver;
- More expensive courses/universities could become (even more) socially exclusive as poorer students feel forced to choose cheaper/less prestigious ones, not the ones they like/want to go to;
Plan B: The Demise of Fees?
We already know a little bit about what the future looks like for graduates. At the aggregate level, they are more likely to be employed, and to earn more over their lifetimes, than non-graduates. This is the main rationale for tuition fees, that you invest in your future earnings by going to university. The problem is that what you do – and how much you earn – after graduating can vary hugely. Overall, it is down a range of things, key of which are:
- What you study;
- Which university you go to;
- Who you are;
- How long you work for;
- Luck (e.g. the state of the economy/labour market).
If you take a ‘perfect’ case, you’d be a posh, white, able-bodied male studying Engineering at Oxbridge. You get hoovered up by a City finance firm before you’ve even graduated, in part due to the status of your university, your numeric literacy and problem-solving skills, and how you talk/dress etc. It will also help that you rowed for your college, hiked up Kilimanjaro and rescued turtles in Indonesia on a gap year, and did a summer internship at an investment bank, courtesy of an uncle who works there. Your future will be almost immune how the economy is doing, you make big bucks and your tax returns for the next forty odd years are impressive – assuming you pay tax, of course!
This, of course, doesn’t represent many people at all. There is a great deal of unfairness here, particularly as women, the disabled, ethnic minorities, and those from more disadvantaged backgrounds are less likely to study certain subjects and/or attend certain kinds of (i.e. ‘top’) universities. They then also pay a penalty on the labour market for having babies, being sick, working collegially rather than competitively, being the ‘wrong’ colour, having the ‘wrong’ kind of name, speaking with a regional accent, and/or simply living/graduating during an economic recession. The problem here is that most of this is known, but the evidence is piecemeal.
What the tax return data may do is definitively take the wool off our eyes, proving that the current numbers behind degrees simply don’t add up for most people. There are already indications of this because the rate of repayments for student loans is lower than predicted. The cynical among us might think that they knew this would happen and were overly optimistic to get the policy approved… Either way, we might be on the edge of blowing the lid off the whole thing, exposing the unfair and partially invisible financial and status divides that permeate our university system and job market. Maybe they’ll have to charge higher fees for wealthier students, although I can’t see that one washing through an election!
In the longer run, it’ll take years, even decades, to really understand what’s going on in relation to degrees and earnings, and there’s no guarantee that whoever is in government won’t cherry-pick the data to show what they want it to. But if the data was publicly available, and we can see dimensions such as gender, ethnicity, social background, dis-/ability, and the state of the economy, this could be a powerful resource for positive change. Wishful thinking? Watch this space!